Mechanics Universal Joint Co. v. Culhane - 299 U.S. 51 (1933)
U.S. Supreme Court
Mechanics Universal Joint Co. v. Culhane, 299 U.S. 51 (1936)
Mechanics Universal Joint Co. v. Culhane
Argued October 14, 15, 1936
Decided November 9, 1933
299 U.S. 51
1. One of the objects of the national bank system is to secure, in the event of insolvency, a just and equal distribution of the assets of national banks among unsecured creditors, and to prevent such banks from creating preferences in contemplation of their failure. To that end R.S., § 5242, 12 U.S.C. 91, prohibits preferential payments. P. 299 U. S. 55.
2. Revised Statutes, § 5242, provides that payments made by national banks "in contemplation" of the commission of an act of insolvency, "with a view to the preference of one creditor to another," "shall be utterly null and void." Held that the duty thus imposed not to defeat by preferential payments the just and equal distribution of assets is not confined to the executive officers, but extends to the individual directors of the bank, and is covered by their oath, R.S. 5147. P. 299 U. S. 56.
3. The president and manager of a manufacturing company which had a deposit in a national lank of which he was a director, having learned in confidence, as director, that the condition of the bank was precarious, caused part of his company's deposit to be withdrawn by means of a check, executed by him on its behalf and passed through the clearing house. The bank at the time was doing business with its customers as usual, but it closed its doors on the following business day.
(1) That the payment was a preference in violation of R.S., § 5242, and recoverable from the company by the bank's receiver. P. 299 U. S. 56.
(2) The director also was liable jointly and severally. P. 299 U. S. 57.
4. Claim that deposits were made when the bank was insolvent, that they were obtained fraudulently by impliedly representing, through keeping the bank open, that it was solvent, and that, hence, the title to so much of them as came into the hands of the bank's receiver remained in the depositor and could be followed as trust funds, held properly dismissed in the absence of findings or evidence to show that the bank was in fact insolvent, and believed by
its officers or directors to be so at the times when the deposits were made. P. 299 U. S. 57.
5. A respondent in certiorari who did not file a cross-petition cannot question the decree of the court below. P. 299 U. S. 58.
80 F.2d 147 affirmed.
Certiorari, 298 U.S. 648, to review the affirmance of a judgment for the receiver of a national bank in an action to recover a preferential payment made to a depositor, one of the present petitioners, in contemplation of the bank's insolvency. A director of the bank was made codefendant in the action, and joined in the petition for certiorari.